‘It may take you months or even a few years to build up an adequate emergency savings fund. That’s okay.’ Suze Orman.
We all hate unpleasant surprises, and that’s what financial emergencies are, not desirable at all. This is because they often change our plans drastically. The experience is even more troubling if you do not have enough money when the emergency happens.
- Anticipate
We all face financial emergencies from time to time. Managing a financial emergency is, therefore, one thing we ought to learn. And the first thing you need to know is that, just like other similar events, it all starts way before it actually hits.
Planning for an emergency even before you see signs of one in the horizon is not a waste of time or tempting fate, it’s just good planning. The fact is emergencies will almost always happen, and most will require money. So it’s important to anticipate and plan for them.
The first thing you should do is figure out what type of emergency you need to prepare for. If you lost your job today would you survive comfortably until you found a new one? If your business wasn’t doing well, would you struggle? What if you or your loved one fell sick, would you be able to meet hospital bills? If a good business opportunity suddenly arose, would you be able to take advantage?
The first thing you should do is figure out what type of emergency you need to prepare for. If you lost your job today would you survive comfortably until you found a new one? If your business wasn’t doing well, would you struggle? What if you or your loved one fell sick, would you be able to meet hospital bills? If a good business opportunity suddenly arose, would you be able to take advantage?
You need to ask yourself all these questions, and more, to figure out what you should focus on.
- Plan
Once you identify potential pitfalls or your financial Achilles heel, make a plan to avoid them. You might decide to open a Savings Plan account for a specific goal, or just one big emergency fund to cover all your emergency expenses. Either way, an emergency fund is the best way to cushion yourself when the rainy day finally happens.
You might also consider having insurance for some emergencies, especially medical insurance, but that too is not a substitute to an emergency fund since the latter is more flexible as you can dip into your emergency fund to cover your medical costs, but you cannot use your medical insurance for emergency car repairs.
- Take Action
Once you have identified the option to take, choose the right product and take action. For emergency funds, try the Zimele Savings Plan which offers you a competitive rate of interest, and liquidity. Another consideration is you need to save where the rate of return exceeds the rate of inflation. This way, your money will not be losing value over time. You also need to save where you can access your money at fairly short notice when the event finally takes place.
Conclusion: Managing an emergency starts way before the event, planning for it makes all the difference between cushioning yourself adequately, or ending up in financial distress. Start building an emergency fund today.
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